In India, millions of agents and brokers sell life insurance. Most of them intend to help their clients choose a policy that they will require, based on their lifestyle. However, some fraud agents will misrepresent the facts on the policy and try to sell the same to you. They will create a twisted picture of the attributes of the policy and convince that you will be in need of the plan. To avoid this, buyers should be aware of the common techniques by which the policies are mis-sold to them.
Here are the 5 common ways of mis-selling the policies
- Promising that the insurance policy gives better return than FD
- Not clearly describing the benefits of the policy
- Inaccurately stating what you can claim
- Deceptive information on premiums
The insurance agent convinces the client that the insurance policy gives better return than FD which is however, not true. The life insurance property assures that the members of your family will be financially stable and safe by providing them with a large sum of money in case something unfortunate is to happen to you. The company charges you regular premiums to provide your family with the “assured sum” if needed in the future. In addition to this, the life insurance policy also provides other benefits to the clients which may be used like savings. They may be in the form of money back, maturity benefit that is the benefit at the end of policy, the amount payable in between the policy terms or bonus. All the policies contain 2 elements namely protection element and saving element. FD on the other hand is a purely saving product and is in no way comparable to insurance policies. Moreover, the rate of return is generally higher for the FD than insurance policy.
As a customer, you are paying the “cost” which is the regular premium for the insurance policy. The protection and savings offered by the policy are considered as its “benefits”. Tax benefits are also given by life insurance policies. To make the policies appealing, many agents twist and amplify the policies and return rates. You should be careful while dealing with an agent who offers a deal that appears too good to be true. If your agent says that you will get many times the premium paid by you, you should also have a clear knowledge of how many premiums you will need to pay to get the assured sum.
This is done mostly with accident and health insurance policies. The policy buyer should clearly know the different situations for which he will not get the claim. If the information given by the client is not true, for instance if he declared himself to be a non-smoker in his application form but was a smoker in reality, he will not be eligible for the claim.
The benefits offered by the policies are overemphasized by the agents while skipping the discussions on costs with the clients. The customer should buy a policy whose premium amount can be paid easily by him. The agent should also make the customer aware of the consequences of not paying the premium till the end of term.